Altra Holdings, Inc (NASDAQ: AIMC) manufactures a wide variety of power transmission and motion control products such as clutches and breaks, enclosed gear drives, engineered belt drive, couplings, engineered bearing assemblies and a variety of related products. The products are used in various high volume manufacturing processes as well as in elevators as well as commercial and residential lawnmowers. As I have explained before my process starts with technical analysis. In the case of AIMC this has been a strong stock, refusing to decline, even during the bear phase the market has gone through most of this year. One of the strongest buying patterns is a long, sideways type price âbasingâ move, which we see has been forming in Altra since early May. The stock has been on my radar for a few months, and I think that it's now getting close to an entry. Altra reported very solid second quarter results that beat estimates for its revenue and EPS numbers. This occurred despite overall deterioration of Industrial conditions in its primary North American market. Altra has a history of positive EPS surprises, which is something I like to see in a company. They are also seeing solid International growth for the product line, and its overall 7.3% internal growth is better than its peers. The company has been improving margins, which hit records this quarter, and it continues to introduce new products in new markets. All of this, along with the technical picture I presented above has me bullish on AIMC if it can close above $18.25 per share on above average volume. This is a relatively unknown stock, with only five analysts covering it and and an average daily volume of around 250k shares. With a share price of under $25, all of these factors could be contributing to the lack of coverage even though AIMC has a history of strong EPS and Revenue growth, along with very solid ROI and Cash Flows. This lack of coverage can create risks as well as benefits to an investor. If your not used to small cap stocks of course you should go slowly with any relatively unknown name, but to me, these are the kind of names, much like AFAM (although AFAM had much better traits overall and I was more aggressive with that position than I will be with this one) which offer the potential of outsized returns.
Its unlikely that I will ever be the best fundamental analyst in the world. I have a hard enough time if my ATM balance is different than my checking balance, so getting too far beyond that and I am in a grey area. However, as a trader I do think its important to have some understanding of the fundamentals of a company you are looking for. Technical analysis is great, and it is by far the strongest point of my own trading, but if that is all your looking at you are not getting nearly as much of the picture as you could be or should be. This is just going to be a very basic piece on how to approach fundamental analysis, in terms of learning how to do some basic work on your own, what to look for and growing as a trader and analysis from that. Everyone has people who help them in life, and in terms of fundamental analysis I have to thank my business partner Anthony. My early approach was fairly simple, I would look at the EPS, make sure it was growing and dance the happy dance if the ESP âlooked goodâ and so did my technical analysis. As crude as that sounds, its still more than most technicians do, and I do think that has a negative result on the results they could have if they are a longer term trader, say beyond a week or two. I've found that some of my best stocks are going to be the ones showing the best EPS growth at the time I buy them and during the time I own them (whoa is me if the EPS slows down while I own them), so the EPS is a good place to start. Personally I like to see a company that can grow ESP at 25% or more on a quarter over quarter basis. It's best if the company has a history of growing its EPS, and even better if the last several quarters have seen accelerating growth in that number. Now, before you get too excited, there are all kinds of numbers showing HUGE EPS gains because in the last quarter they lost money or only made 1 cent. I tend to throw those away except in special cases, until you know what your doing you should not allow for special cases, its just asking to be kicked between the legs. The next thing I look at is how close does the Revenue growth come to the EPS growth. You see a lot of companies that are growing ESP at 100% while Revenue only grew at 10%. Having run my own business for some time I always ask myself, how could I double my profits while barely growing my revenue at all? Answer, I probably could not, and if I could it would not be sustainable growth, and its no different for most other companies either, so if the EPS numbers and the Revenue numbers are out of whack, then I stay away. Simple things for simple people you know. The next few things I like to look at are the Return on Investment numbers (ROI). This tells us how effectively the company is putting its money to work, more is better in this case. I like to see above 10% for sure, and ideally better than twenty. I also consider the number of analysts who follow the stock to be a fundamental consideration, although this is more about the stock than the company, and also things like the number of fund managers who own it as well. The less well known your name is the better your chances of making a good bit of money on a stock. The above ideas are all pretty simple places to start. As you move along your going to want to actually look at the company. When I started, again using the simple things for simple people approach, I would just look at the companies growth rate, lets say its 40%. I would next dig around to see what its competitors where doing. After I have that info I ask myself, well how are they doing it, and can it continue? What kind of hardships might they run into, what kind of success might they have. Why? Be like a two and a half year and and ALWAYS ASK WHY! Next look at the dominant player in the group and simply ask yourself âHow did it get so big?â. Dig, read the reports and figure it out. It gives you a sense of the history of that company, what happened and the language that was used as they grew rapidly. Its a good way to be able to spot the same thing in the future. Finally feel free to call the companies directly and ask questions. You should do this on most stocks you plan to own for any period of time. I started off calling mega cap names like Walmart, Citi, Ford etc just to get used to asking questions and learning about a company. I figured that I was going to ask some dumb questions, but they have a lot of people calling them every day, so I doubt I ever won the idiot of the day award, although I'm sure I came close. Even if I did, its not like those people are my neighbors or are every going to remember me anyway. Anyway, this is just some basic stuff that should get you started. I hope you find it helpful. Feel free to fire away at the questions.
Every now and then I cant help myself and I find a decent daytrade, and the old daytripper in me comes out. 1999 here we come again! ahhhh
http://business.timesonline.co.uk/t...ectors/banking_and_finance/article4563171.ece With the exception of Nouriel Roubini, who was born bearish, where were all these assclowns say one year or so ago? Oh, right, they continued to say "all is well, go forward the sea's are clear", meanwhile a hurricane was developing right off shore before their eyes and they refused to see it because some stupid mathematical model that makes the present and near past way too important refuses to believe it is there.
Every now and then my mind slips and it feels like 1999 to me and I just have to DAYTRADE, or at least feel like I am. Whenever you read a book on Technical Analysis they tell you that you should use multiple timeframe analysis. That's all well good and true, but then no one really bothers to explain how you go about using that multiple time frame analysis, so your left with not too much more than you had when you picked up the book. Today I bought Fuel System Solutions, which will allow me an excellent opportunity to show you how to properly use multiple time frames in your trading. Lets first look at FSYS the company on a very basic level. This is company that manufactures components used convert cars to run on Natural Gas. Nothing is much hotter right now than energy, and alternative energy is all the rage, especially with the expectations of an Obama Administration. Not only is Fuel Systems in a good industry for the moment it's recent past shows that management has done a much better than average job of running the company. EPS growth has been in the several hundred percentage range for the last three quarters, and sales growth has also been growing in the mid to high double digits. The company maintains low debt, high insider ownership and a still relatively modest PE of 39 (modest given the growth rates it has shown, see my prior article on Price to Earnings Ratio's) Now for the technical end of things. As you can see in this chart Fuel Solutions has maintained a strong uptrend for the last several months. This uptrend, a price movement consisting generally of higher highs. As a general rule I favor buying stocks in uptrends since it has been my experience that simply standing in front of a train and expecting it to stop because you are standing there is foolish, its much better to just get on and ride the thing. From 7/15 until 8/5 the stock formed a nice little basing pattern, breaking higher on modestly higher volume on the 6th just ahead of earnings. Not wanting to jump into a brand new position in a stock two days head of its earnings report I have had to be content to just watch. On the 8th FSYS reported good earnings and raised Wall Street's expectations about the coming quarters, which caused a sharp move higher. After the breakout and then the sharp rally on the 8th the stock, in my estimation, needed to cool off a bit. The best ways for this to happen is either by a period of sideways, basing price movement like you see in FSYS from Mid July until Early August, or by retracing some of the gain, forming what we call a bullish flag. That is what FSYS has done, forming the high level flag between the 14th and today. This morning I came in with FSYS on my watch list, and right away it provided an entry opportunity, which you can see on the bottom, one minute, chart. This entry was from $56 per share and allowed a small initial stop loss to be placed under $55.50. The next setup occurred as the stock broke higher out of the first and then pulled back. My entry here occurred at $57.10 with my stop on the first potion raised to $56.50 and the stop on the new entry also placed there. I now have myself in a situation where I have a lot to gain, and nothing to lose. Using multiple timeframes in this manner is truly, in my opinion, one of the best ways to lower risk. If you can find an intraday setup for a multiday or swing type position you can risk the smaller amount that is typically found on the intraday, daytrading setup, while having all of the upside potential of the larger timeframe to boost your profits. A few times a week I stop have time to stop by Toni Hansen's tradingfrommainstreet.com chatroom, which is free on othernet, and allow traders to see what I am doing at the instant I do it. Today was one such occassion and traders in the room got to watch live as I gave the entries on FSYS. Disclosure: I am long FSYS from an average price of $56.60, my stop is now under the intraday support at $57.50.
China has started to accumulate greenbacks pretty steadily in order to try to avert its own economic crisis. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/26/ccchina126.xml
every now and then i look really really smart: http://www.elitetrader.com/vb/showthread.php?threadid=110508